Total blackout risk low – but not zero

A total blackout is unlikely. However, businesses must still prepare for the possibility as the effects will be catastrophic, and load-shedding will likely remain higher for longer.

This is according to energy analyst Chris Yelland and Citadel’s chief economist Maarten Ackerman who spoke at a webinar hosted by Citadel Wealth Management.

Yelland pointed out that a total blackout is unlikely to occur in South Africa, with elevated levels of load-shedding preventing demand from outstripping supply.

A total blackout occurs when Eskom’s generating units automatically go offline due to greater demand than supply. This is to ensure that the grid can be rebooted quickly.

Load-shedding is implemented to artificially lower demand to ensure a blackout does not occur.

Ackerman agreed with Yelland, saying that the probability of a blackout occurring is low.

However, the effects of such an event would be catastrophic, so businesses must prepare for it.

While the likelihood of a blackout is low, it is not zero, so it warrants concern and preparation, Yelland said.

Businesses preparing for a blackout

Citadel chief economist, Maarten Ackerman

Ackerman detailed Citadel’s participation in the JSE’s working group focused on minimising the impact of elevated load-shedding and a potential blackout.

The JSE has created backup systems to ensure that trades can still be placed during a blackout and ensure investors retain custody of their investments.

The JSE is not alone in preparing for a blackout

Standard Bank has partnered with local industry, the South African Reserve Bank (SARB), and the broader authorities to prepare for this scenario.

The central bank has been preparing plans to respond to a national or regional electricity grid failure since 2015.

Last month, the South African Reserve Bank, through the Financial Sector Contingency Forum (FSCF), said it was preparing contingencies for a national grid failure.

“As part of these preparations, the FSCF has been in regular contact with Eskom, the petroleum industry and the telecommunications industry,” the SARB said.

Many other South African telecommunications, retail, mining and financial services companies have also said they have been preparing for a total grid collapse.

As part of their total blackout preparations, MTN has set up “war rooms” to ensure critical sites remain operational, and the JSE stocked up on diesel to run its operations for seven days.

A total grid collapse isn’t “highly probable, but you have to plan for that,” said MTN CEO Ralph Mupita.

Load-shedding is likely to get worse

Solidarity Research Institute head Connie Mulder

Load-shedding will likely remain elevated throughout the next two to three years to avoid a blackout.

This is according to Solidarity’s head of research Connie Mulder who spoke at a Free Market Foundation event.

“We are in a rough patch now, and it will become rougher over the next few years,” Mulder said.

The private sector and communities will have to come together to get as much power onto the grid as soon as possible, as Eskom cannot do it.

“We will never again have a stable national network,” according to Mulder.


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